Long Live the Industrial Revolution?

Our economic world is changing in ways that are unrecognisable to many people. These changes challenge the basis of any business plan.

Brexit is just one factor. Now, in the UK the assumptions upon which many organisations have been based for the last 40+ years, no longer apply. We might have disliked the EU rulebooks and regulations, but they underpinned economic life and gave a framework. Now there is significant uncertainty, not least over which rules we as businesses need to follow.

But Brexit masks three vastly more significant global challenges that will overthrow the last 250 years:

Industry 4.0

The effects of the Smart Economy

A refocusing of the models of capitalism

All three will impact on the way we will do business in the future. All three overthrow the preconceptions of the First Industrial Revolution. Each is too big for a single blog as each requires careful thought. Only then can we start to build our new business strategies.

Industrial Revolution One to Three

Around 1760, the First Industrial Revolution began. With the adoption of steam and water power, the process of continuing mechanisation could begin. It became easier to produce volumes of product. With the increase in volume, so the cost per item was lower and more affordable. Thus consumers could buy more and value became focused on scarcity and variety.

This started massive social change as workers left or were not needed on the land and moved to the factories as production workers.

The Second Industrial Revolution came with electrification, assembly lines and mass production. With this was the significant drive for efficiency of manufacture. Electrification permitted consistent energy supplies and 24 hour working every day. Assembly lines broke manufacturing down into systems where peoples’ actions could be optimised like machines through time and motion. Mass production created the need for large markets and global demand.

So what started in the valleys moved to fast-growing urban centres able to transport goods around the world.

Computers and automation fuelled the Third Industrial Revolution of the 1960’s onwards. Progress allowed us to take away the difficulties of processing information. Instant communication was now possible and broadcasting information easy. This could be within the business or externally through mass marketing techniques.

Industry 4.0

We are at the start of the Fourth Industrial Revolution. A high-tech strategic team of the German government looking at manufacturing coined Industry 4.0. Unveiled at the Hannover Messe of 2011 and 2013, it requires 4 things:

Interconnection. This is seen most readily in our communication devices and the growth of the Internet of Things and related apps. This works when everything is connected like a web.

Information transparency. This means collection of mass data and the analytical tools that enable us to turn data into information and therefore action by focusing on key areas.

Technical assistance in two ways. The ability to aggregate and visualise data so that we make informed decisions- think KPIs and colour coding to focus our minds. Secondly cyber physical systems to physically support humans. This takes away the need for humans to do ‘unpleasant or dangerous tasks’. But the issue is who decides what these tasks are.

Decentralised decisions. This takes the cyber-physical systems and enables them to make their own decision. Only if there are exceptions, conflicting goals or interferences are the decisions delegated to a higher level. Here, think of AI and automatic parking.

The machine-smashing Luddites of the First Revolution rebelled against the significant changes to the world by a society focused on progress. The progress of the Fourth could significantly free mankind from the drudgery of manufacturing and of service industries. But in doing so it begs the question what do we, as individuals, do then?

Next week, the Smart Economy raises further questions. And sorry you will have to wait in real time, as information has always meant power!